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claims and has otherwise sought to avoid its responsibilities as a motor common carrier as set forth in the Interstate Commerce Act. Section 20(11), which has been made applicable to part II of the act by section 219, restates the common law rule that a motor common carrier is virtually an insurer against loss, damage, or injury to property it accepts for transportation, Loss and Damage Claims, supra, at page 522. There are, however, certain recognized exceptions, such as so-called "acts of God," acts of the public enemy, or the inherent nature of the property shipped which limit this liability. The Commission also requires that a regulated carrier, in addition to accepting responsibility for the condition of the commodity shipped, establish reasonable practices and procedures for the handling of loss and damage claims, and its record with respect to the satisfactory or unsatisfactory settlement of such claims is among the criteria involved in determining the fitness of a carrier to conduct new or additional regulated operations.
AAACon's pattern of conducting its business in the past demonstrates a concerted effort on its part to discourage the filing of claims, whenever possible, and to deny a claim on the basis of an inherent mechanical defect in the vehicle or a so-called "act of God" with little or no investigation into the merits of the specific claim. The record in this proceeding is replete with evidence indicating AAAC on's lack of concern, bordering on almost total indifference, for the interests of its customers. The lack of interest and concern on the part of AAACon, as expressed in a number of the letters submitted as exhibits in this proceeding, is clear evidence to this Commission that AAACon's actions in the past have been inconsistent with its common carrier obligations to provide a responsive service to its customers. Clearly, when a carrier offers to provide a transportation service to the shipping public it does so voluntarily and with full knowledge of its responsibilities both under common law and the Interstate Commerce Act. It requires an attention and concern to the needs of its customers with mandates that every effort be made to furnish the contracted type of service. AAACon, in dealing with a prospective customer has, by its advertising and promotional material, encouraged its potential customers to believe that they are completely protected against any damage to their vehicle during the course of the transportation and that its drivers are bonded and otherwise entirely reliable. The whole tenor of its advertising is to the effect that a customer need not worry since its drivers are trustworthy and the entire operation
is fully covered by AAACon's insurance policy. It is quite understandable, therefore, that a customer is dismayed to find either an apparent lack of interest on the part of AAAC on's representative with respect to the whereabouts of condition of his automobile, or, upon filing a claim, that AAAC on is denying liability, with little or no investigation into the merits of the claim, because of an alleged mechanical defect in the transported vehicle, an alleged so-called "act of God," or because of the execution of a "clear receipt." Clearly, for a motor carrier to assert a valid defense in one instance, but not in another, would leave the carrier open to the charge that it is illegally favoring one shipper over another. This assumes, however, that the defenses asserted are valid, have a basis in fact, and are not raised as a means of discouraging a claimant from seeking relief. The record indicates that when one of AAACon's shippers was involved in a civil lawsuit in North Carolina due to the action of the driver selected by respondent, AAAC on filed an affidavit in which it averred that the driver of the automobile was an independent contractor. AAACon admitted, however, in a letter to its insurance company dated September 21, 1970, that it is liable for the actions of its driver even though he is labeled an independent contractor. AAACon's action in this instance is typical evidence of its efforts to avoid its responsibilities as a common carrier under the act. Again, in a letter dated February 25, 1970, AAACon advised a claimant that its insurance company did not intend taking any action; it failed, however, to advise the claimant that in any case it remained primarily liable. In handling the J. B. White claim, AAACon addressed to the claimant a letter dated January 2, 1970, in which it stated that it did not authorize the repairs to claimant's car and advised claimant to pay for them so that the car could be moved. It is clear, however, that claimant authorized no repairs and that they were authorized, although perhaps inadvertently, by the casual driver selected by AAA Con to perform the contracted movement and that as principal it was responsible for the actions of its agent. Again, in handling the Wolfe claim the extent of AAACon's "investigation" appears to have been a telephone call. Although AAACon repeatedly states that its actions in asserting its defenses were motivated by its desire to avoid the appearance or fact of giving a rebate, it apparently failed to note that in advising claimants to retain the final $50 of the freight charges, without conducting an investigation, AAACon was in effect granting rebates to such shippers.
A resolution of the issues at hand does not, we believe, require us to determine whether the use of a ficititious name by its claims representative is a reasonable business practice or whether the incorporation of an arbitration clause into AAACon's bill of lading is acceptable or even desirable. Arguments have been made in this proceeding to the effect that a compulsory arbitration agreement entered into voluntarily by the parties to a transportation contract prior to the actual movement might be a suitable and even desirable means for settling claims for damages resulting from the movement. However, in this instance, both were used in a manner to discourage and confuse prospective and actual claimants. The wording of the pertinent arbitration agreement, irrespective of the manner in which an individual court might interpret the provision, would lead the average individual to the conclusion that arbitration must be held in New York City, and a prospective claimant, when faced with the expense and inconvenience of bringing an action in New York City, might well forego seeking relief. In addition, by the express terms of AAAACon's bill of lading, the arbitrator is required to apply the terms of the bill of lading, which provide, among others, that retention by consignee of the deposit or any portion thereof constitutes settlement of any claim arising from the transportation, or tender by consignee of the balance to the driver upon signing the bill of lading indicates satisfactory delivery. Claimant's right to have the matter arbitrated seems, therefore, to be of questionable benefit to the shipper.2 AAACon and Auto Trip's assertion that the percentage of claims filed with AAACon is very low, and that a number of claims have gone to arbitration is, as a result, of little significance, since the low percentage of claims may very well be due to AAACon's claims handling techniques and the terms of its bill of lading which clearly discourage the filing of claims. The fact that some claims have gone to arbitration does not refute our conclusion that AAAC on has actively sought to discourage the filing of damage claims.
We are, of course, aware that this form of transportation is unique in that the licensed carrier regularly employs so-called "casual
The agreement provides in part that any claim or controversy, whether founded in contract or tort, arising out of or relating to this agreement or the performance or breach thereof, is nonassignable and shall be settled by arbitration in the city, county, and State of New York, provided, however, that upon such arbitration the arbitrator(s) shall be bound by, and may not vary or modify, the provisions of this Bill of Lading agreement and shall, at the request of any party thereto, apply the rules and laws of evidence that would otherwise apply in a court of proper jurisdiction.
drivers" and the commodity transported is actually the mode of transportation. We do not feel, however, that the difficulties inherent in this type of operation justify AAACon's past business practices and procedures. The unique nature of this form of transportation necessitates instead added diligence on AAACon's part in soliciting its prospective drivers and a readiness to accept liability in those instances where its drivers are negligent. We believe that greater care can be exercised at the time the vehicle is tendered to insure that the vehicle is in satisfactory condition, and, although certain mechanical defects will go unnoticed, such obvious problems as defective brakes or improper or defective tires will more easily be spotted. In addition, a record can be made, at the time the vehicle is tendered, of the correct mileage on its odometer so that it can be determined, on delivery, whether the driver has chosen the shortest and most suitable route. Although AAACon and Auto Trip complain that more rigorous standards for driver selection and a more complete inspection of the vehicle when tendered might be so costly as to render this type of operation unprofitable, we do not believe that these or similar changes in its operating procedures will so burden its overall operations as to render its operations unprofitable. The record in this proceeding overwhelmingly demonstrates that the added benefit to the shipping public will outweigh any additional cost.
We believe that the evidence of record also supports the Administrative Law Judge's additional finding that AAAC on has in the past engaged in the illegal transportation of automobiles to auto dealers in violation of the restriction contained in its operating authority. Although AAAC on and Auto Trip claim that three of the alleged illegal movements involved the transportation of automobiles to an auto dealer acting as a lessor of the automobile and although title to the vehicles was transferred to the lessee, the movements were nevertheless to an auto dealer, in clear violation of the restriction contained in its certificates. Those movements cited by the Bureau which AAACon alleges involved the movement of repossessed vehicles to credit bureaus, were obviously to be sold as soon as possible by an auto dealer in order to minimize any loss. The intent of the restriction is clear, and these movements constituted a violation of the expressed limitation contained in its operating certificate.
The incidents cited above, as well as those which respondent admits violated the restriction contained in its certificate, demonstrates that AAAC on has transported vehicles beyond the
scope of its authority in violation of the clear intent of the restriction contained in the involved certificate, and has thereby shown itself to have been operating in interstate or foreign commerce in an unlawful manner. The restriction was imposed to protect the interests of motor carriers engaged in the transportation of vehicles to auto dealers, and to define the nature of the service authorized by AAAC on's Certificate No. MC-125808 (Sub-No. 1). We believe that AAAC on's and Auto Trip's contentions that the restriction is vague, ambiguous, or illegal is without merit; that the Administrative Law Judge properly found that the restriction is clear on its face and unambiguous, and, therefore, he properly denied the relief sought in AAACon's petition for declaratory order, as set forth in No. MC-C-7287 (Sub-No. 1), and embraced herein, and the relief sought therein will be denied.
We conclude, based on the evidence presented here, that AAAC on has engaged in unjust and unreasonable practices and has been an unlawful operator in interstate or foreign commerce. Accordingly, a cease and desist order will be entered. Failure on the part of respondent to comply with the provisions of this order will result in the institution of proceedings aimed at suspension or revocation, in whole or in part, of the certificate issued respondent in No. MC-125808 (Sub-No. 1).
We turn next to the application by Auto Trip. Under section 410 of the act, the Commission may issue a freight forwarder permit to a "qualified" applicant if it finds that the applicant is ready, able, and willing properly to perform the proposed freight forwarder services, and that the proposed operation is consistent with the public interest and the national transportation policy. Although the burden of establishing that it is a qualified applicant and is ready, able, and willing properly to perform is not as strict a burden as that by a motor carrier applicant in establishing its "fitness" under section 207 of the act, Hurley Freight Forwarder Application, 285 I.C.C. 704, 709 (1955), the Commission may nevertheless consider whether an applicant is qualified or not to act as a freight forwarder by examining its involvement in unlawful operations. ABC Freight Forwarding Corp. Ext.-Massachusetts, 285 I.C.C. 276, 281-82 (1953), affirmed sub nom., ABC Freight Forwarding Corp. v. United States, 125 F. Supp. 926 (S.D.N.Y. 1954), affirmed per curiam, 348 U.S. 967 (1955), and Lifschultz Fast Freight Extension—Wisconsin, 285 I.C.C. 659, 665 (1955). Compare also Lifschultz Fast Freight v. United States, 144 F. Supp. 606 (S.D.N.Y. 1956). Although the